Fifth Third Bank 2004 Annual Report Download - page 48

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
46 Fifth Third Bancorp
At December 31, 2004, the minimum future lease payments receivable for each of the years 2005 through 2009 were $1,375 million,
$1,251 million, $934 million, $575 million and $356 million, respectively.
Transactions in the reserve for loan and lease losses for the years ended December 31:
($ in millions) 2004 2003 2002
Balance at January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 697 683 624
Losses charged off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (321) (380) (273)
Recoveries of losses previously charged off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 68 86
Net charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (252) (312) (187)
Provision for loan and lease losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268 399 246
Reclassifi cation of reserve for unfunded commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —(73) —
Balance at December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 713 697 683
The components of the investment in lease fi nancing as of December 31:
($ in millions) 2004 2003
Rentals receivable, net of principal and interest on nonrecourse debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,749 4,917
Estimated residual value of leased assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,158 2,222
Gross investment in lease fi nancing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,907 7,139
Unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,430) (1,427)
Net investment in lease fi nancing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,477 5,712
A summary of the gross investment in lease fi nancing as of December 31:
($ in millions) 2004 2003
Direct fi nancing leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,474 4,978
Leveraged leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,433 2,161
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,907 7,139
3. LOANS AND LEASES AND RESERVE FOR LOAN AND LEASE LOSSES
A summary of the loan portfolio as of December 31:
2004 2003
As of December 31 ($ in millions) Gross
Unearned
Income Net Gross
Unearned
Income Net
Loans held for sale:
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — — — 17 — 17
Residential mortgage . . . . . . . . . . . . . . . . . . . . . . . . . 545 — 545 1,105 — 1,105
Other consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 — 14 759 — 759
Total loans held for sale . . . . . . . . . . . . . . . . . . . . . . . . . $ 559 — 559 1,881 — 1,881
Loans and leases held for investment:
Commercial:
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16,058 — 16,058 14,209 — 14,209
Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,348 — 4,348 3,301 — 3,301
Commercial mortgage . . . . . . . . . . . . . . . . . . . . . . 7,636 — 7,636 6,894 — 6,894
Commercial lease fi nancing . . . . . . . . . . . . . . . . . . 4,634 (1,208) 3,426 4,430 (1,166) 3,264
Total commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,676 (1,208) 31,468 28,834 (1,166) 27,668
Consumer:
Residential mortgage . . . . . . . . . . . . . . . . . . . . . . . 6,988 — 6,988 4,425 — 4,425
Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378 — 378 335 — 335
Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 843 — 843 762 — 762
Home equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,508 — 10,508 8,993 — 8,993
Other consumer . . . . . . . . . . . . . . . . . . . . . . . . . . 7,572 — 7,572 7,677 — 7,677
Consumer lease fi nancing . . . . . . . . . . . . . . . . . . . 2,273 (222) 2,051 2,709 (261) 2,448
Total consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,562 (222) 28,340 24,901 (261) 24,640
Total loans and leases held for investment . . . . . . . . . . . $61,238 (1,430) 59,808 53,735 (1,427) 52,308
At December 31, 2004, 94% of the unrealized losses in the
available-for-sale security portfolio were comprised of securities
issued by U.S. Treasury and Government agencies, U.S. Government
sponsored agencies and states and political subdivisions as well as
agency mortgage-backed securities. The Bancorp believes the price
movements in these securities are dependent upon the movement in
market interest rates particularly given the negligible inherent credit
risk for these securities. At December 31, 2004, the percentage of
unrealized losses in the available-for-sale security portfolio repre-
sented by non-rated securities was one percent.
At December 31, 2004 and 2003, securities with a fair value of
$17.8 billion and $17.9 billion, respectively, were pledged to secure
borrowings, public deposits, trust funds and for other purposes as
required or permitted by law.
Unrealized gains (losses) on trading securities held at Decem-
ber 31, 2004 and 2003 were not material to the Consolidated
Financial Statements.